Duluth-Based Minnesota Power Proposes Rate Hike In Cost-Cutting Plan

DULUTH, Minn. (AP) — Minnesota Power is proposing a rate hike for residential customers as part of a plan to cut electrical costs for struggling mining and paper companies.

The Duluth-based utility filed the plan Friday with the Minnesota Public Utilities Commission. The proposal calls for a 14.5 percent rate increase for a typical residential customer. That would amount to about $11.45 per month, according to the Minneapolis Star Tribune.

The residential increase would offset a proposed 5 percent cut for a dozen large mining and paper companies in northeastern Minnesota.

A state law passed earlier this year allows companies struggling with global competition to apply for a break in their electricity rates. But Democratic state Rep. Tom Anzelc of Balsam Township, who introduced the legislation, said he’s having second thoughts.

“The proposal from the power company is ill-timed and much, much, much too large,” Anzelc told Minnesota Public Radio News.

The utilities commission is expected to decide on the matter early next year.

Three of the facilities that the new rate plan would benefit remain closed because of low iron ore prices and stiff competition in the steel industry: U.S. Steel’s Keewatin Taconite, Cliffs Natural Resources’ United Taconite, and Mesabi Nugget.

Minnesota Power spokesman Pat Mullen acknowledged that the proposed rate reductions for those mining companies, as well as paper mills, wouldn’t solve all their economic woes.

“But everyone’s doing their part,” he said.

Minnesota’s iron mining industry has seen more than 1,000 layoffs over the past year. The region’s paper mills have also shed hundreds of jobs in recent years.

Minnesota Power is heavily reliant on those large customers. Iron ore mines and taconite plants consume 40 percent of the power the utility generates. In addition, paper mills buy nearly 20 percent.

Mullen said those large customers have paid more than their fair share of energy costs in recent years, and have subsidized residential ratepayers.

The residential utility bill hike would not affect low-income ratepayers.